AKA: “Will this project ever pay for itself?”

Calculating ROI on HCM Projects

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 2

Return on Investment?

One year?Three years?Five years?

Ever?Never?

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 3

Return on Investment?

Traditionally…

DIFFICULTto calculate on Human Capital Management projects.

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 4

Return on Investment?

Does a better Appraisal Process pay

off financially?

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 5

Return on Investment?

If we

RECRUIT better, do we

save $?

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 6

What if?

WHAT IF fully loaded human costs for a 10,000

person company is $300M annually?

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 7

What if?

WHAT IF a great HCM solution could

trim the human cost by 1% annually?

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 8

The Answer...

The

HCM ROI Model

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 9

Step

fully loaded HR costs

Build out

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 10

Step

the FULLY loaded human

cost

salariesbenefits

taxestraining

recruitingetc.

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 11

Step

Capture HR METRICS

Examples:● Turnover %● Time to hire● Cost to hire● % hired direct● % hired via agencies● Cost to train● Headcount growth● Benefit cost growth

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 12

Make rationalized projections about

improvements.

Step

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 13

Can we reduce cost-to-hire by 2% with a better recruiting system?

Step

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 14

Or trim employee turnover from 14% to 12%?

Step

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 15

And how do these projections hold up over a three year horizon?

Step

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 16

And... how confident are we in these projections of savings?

Step

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 17

All of these factors come together in the Clarkston

HCM ROI Model...

Step

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 18

...To establish a debatable,

challengeable, arguable, model of potential cost

reductions...

Step

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 19

But wait… there’s more!

Step

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 20

Our model must also realistically consider project

cost!

Step

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 21

Step

Costs, Costs, & More Costs...

Such as:● Implementation● Maintenance● Consulting● Licenses● Upgrades● People

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 22

Step

...With all costs spread realistically over a multi-year horizon.

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 23

Step

What are the first year costs of

implementation, project team costs, and license costs?

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 24

Step

What are the ongoing year by year costs of upgrades, additional training, etc.?

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 25

Step

The Clarkston HCM ROI model layers all costs & projected benefits...

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 26

Step

Result: A model of HCM ROI for your next project(s).

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 27

Step

It is just that: a model.

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 28

Step

● Debate it.● Discuss it.● Challenge it.

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 29

Step

But now we can have the conversation!

Clarkston Consulting Confidential & Proprietary. Reproduction by any method or unauthorized circulation is prohibited without prior approval. Copyright ©. All rights reserved. 30

Want to Learn More?

Contact us today to learn more about the Clarkston

HCM ROI modelmarketing@clarkstonconsulting.com